Financial Information of L-3 Communications and Its Subsidiaries (Tables)

12 Months Ended

Dec. 31, 2013

Condensed Combining Statements of Equity

The table below presents information regarding the balances and changes in common stock, additional paid-in capital, treasury stock and retained earnings of L-3 Communications for each of the three years ended December 31, 2013.


	L-3 Communications Common Stock				Additional Paid-in Capital		Treasury Stock		Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Total
	Shares Issued		Par Value		Additional Paid-in Capital		Treasury Stock		Retained Earnings						Total
			(in millions, except shares issued)
Balance at December 31, 2010		100	$	—	$	4,801	$	—	$	2,219		$	(256	)	$	6,764
Net income attributable to L-3		—		—		—		—		956			—			956
Contributions from L-3 Holdings		—		—		263		—		—			—			263
Dividends to L-3 Holdings		—		—		—		—		(1,157	)		—			(1,157	)
Comprehensive loss		—		—		—		—		—			(198	)		(198	)
Other		—		—		—		—		7			—			7

Balance at December 31, 2011		100	$	—	$	5,064	$	—	$	2,025		$	(454	)	$	6,635
Net income attributable to L-3		—		—		—		—		810			—			810
Contributions from L-3 Holdings		—		—		250		—		—			—			250
Dividends to L-3 Holdings		—		—		—		—		(1,064	)		—			(1,064	)
Comprehensive loss		—		—		—		—		—			(96	)		(96	)
Net change of equity due to spin-off of Engility		—		—		—		—		(1,063	)		—			(1,063	)
Other		—		—		—		—		(5	)		—			(5	)

Balance at December 31, 2012		100	$	—	$	5,314	$	—	$	703		$	(550	)	$	5,467
Net income attributable to L-3		—		—		—		—		778			—			778
Contributions from L-3 Holdings		—		—		339		—		—			—			339
Dividends to L-3 Holdings		—		—		—		—		(997	)		—			(997	)
Comprehensive gain		—		—		—		—		—			440			440
Other		—		—		—		—		(4	)		—			(4	)

Balance at December 31, 2013		100	$	—	$	5,653	$	—	$	480		$	(110	)	$	6,023

Condensed Combining Balance Sheets

The following condensed combining financial information presents the results of operations, financial position and cash flows of (1) L-3 Holdings, excluding L-3 Communications and its consolidated subsidiaries (the “Parent”), (2) L-3 Communications, excluding its consolidated subsidiaries, (3) the Guarantor Subsidiaries, (4) the Non-Guarantor Subsidiaries and (5) the eliminations to arrive at the information for L-3 on a consolidated basis.


	L-3 Holdings (Parent)		L-3 Communications		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Consolidated L-3
	(in millions)
Condensed Combining Balance Sheets:
At December 31, 2013:
Current assets:
Cash and cash equivalents	$	—	$	258	$	—	$	261	$	(19	)	$	500
Billed receivables, net		—		364		425		226		—			1,015
Contracts in process		—		951		1,209		364		—			2,524
Other current assets		—		281		160		169		—			610

Total current assets		—		1,854		1,794		1,020		(19	)		4,649
Goodwill		—		2,335		4,325		1,136		—			7,796
Other assets		—		807		529		228		—			1,564
Investment in and amounts due from consolidated subsidiaries		6,712		7,007		3,713		—		(17,432	)		—

Total assets	$	6,712	$	12,003	$	10,361	$	2,384	$	(17,451	)	$	14,009

Current liabilities	$	—	$	909	$	1,005	$	628	$	(19	)	$	2,523
Amounts due to consolidated subsidiaries		—		—		—		246		(246	)		—
Other long-term liabilities		—		1,441		193		124		—			1,758
Long-term debt		689		3,630		—		—		(689	)		3,630

Total liabilities		689		5,980		1,198		998		(954	)		7,911

L-3 shareholders’ equity		6,023		6,023		9,163		1,386		(16,572	)		6,023
Noncontrolling interests		—		—		—		—		75			75

Total equity		6,023		6,023		9,163		1,386		(16,497	)		6,098

Total liabilities and equity	$	6,712	$	12,003	$	10,361	$	2,384	$	(17,451	)	$	14,009

At December 31, 2012:
Current assets:
Cash and cash equivalents	$	—	$	246	$	—	$	242	$	(139	)	$	349
Billed receivables, net		—		290		441		237		—			968
Contracts in process		—		948		1,306		343		—			2,597
Other current assets		—		245		158		188		—			591

Total current assets		—		1,729		1,905		1,010		(139	)		4,505
Goodwill		—		2,038		4,626		1,112		—			7,776
Other assets		—		734		565		211		—			1,510
Investment in and amounts due from consolidated subsidiaries		6,156		7,163		3,286		128		(16,733	)		—

Total assets	$	6,156	$	11,664	$	10,382	$	2,461	$	(16,872	)	$	13,791

Current liabilities	$	—	$	823	$	1,205	$	658	$	(139	)	$	2,547
Other long-term liabilities		—		1,745		210		117		—			2,072
Long-term debt		689		3,629		—		—		(689	)		3,629

Total liabilities		689		6,197		1,415		775		(828	)		8,248

L-3 shareholders’ equity		5,467		5,467		8,967		1,686		(16,120	)		5,467
Noncontrolling interests		—		—		—		—		76			76

Total equity		5,467		5,467		8,967		1,686		(16,044	)		5,543

Total liabilities and equity	$	6,156	$	11,664	$	10,382	$	2,461	$	(16,872	)	$	13,791

Condensed Combining Statements of Operations


	L-3 Holdings (Parent)			L-3 Communications			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated L-3
	(in millions)
Condensed Combining Statements of Operations:
For the year ended December 31, 2013:
Net sales	$	—		$	3,839		$	6,805		$	2,372		$	(387	)	$	12,629
Cost of sales		(59	)		(3,556	)		(6,093	)		(2,109	)		446			(11,371	)

Operating (loss) income		(59	)		283			712			263			59			1,258
Interest expense		(21	)		(176	)		—			(1	)		21			(177	)
Interest and other income (expense), net		—			10			—			5			—			15

(Loss) income from continuing operations before income taxes		(80	)		117			712			267			80			1,096
Benefit (provision) for income taxes		22			(33	)		(201	)		(75	)		(22	)		(309	)
Equity in net income of consolidated subsidiaries		836			694			—			—			(1,530	)		—

Net income		778			778			511			192			(1,472	)		787
Net income attributable to noncontrolling interests		—			—			—			—			(9	)		(9	)

Net income attributable to L-3	$	778		$	778		$	511		$	192		$	(1,481	)	$	778

Comprehensive income attributable to L-3	$	1,218		$	1,218		$	510		$	166		$	(1,894	)	$	1,218

For the year ended December 31, 2012:
Net sales	$	—		$	3,747		$	7,506		$	2,276		$	(383	)	$	13,146
Cost of sales		(59	)		(3,434	)		(6,752	)		(1,992	)		442			(11,795	)

Operating (loss) income		(59	)		313			754			284			59			1,351
Interest expense		(21	)		(183	)		—			(1	)		21			(184	)
Interest and other income (expense), net		—			11			(5	)		2			—			8
Debt retirement charge		—			(13	)		—			—			—			(13	)

(Loss) income from continuing operations before income taxes		(80	)		128			749			285			80			1,162
Benefit (provision) for income taxes		26			(39	)		(241	)		(94	)		(26	)		(374	)
Equity in net income of consolidated subsidiaries		864			689			—			—			(1,553	)		—

Income from continuing operations		810			778			508			191			(1,499	)		788
Income from discontinued operations, net of income tax		—			32			—			—			—			32

Net income		810			810			508			191			(1,499	)		820
Net income attributable to noncontrolling interests		—			—			—			—			(10	)		(10	)

Net income attributable to L-3	$	810		$	810		$	508		$	191		$	(1,509	)	$	810

Comprehensive income attributable to L-3	$	714		$	714		$	510		$	219		$	(1,443	)	$	714

For the year ended December 31, 2011:
Net sales	$	—		$	3,735		$	7,573		$	2,190		$	(340	)	$	13,158
Cost of sales		(57	)		(3,335	)		(6,853	)		(1,868	)		397			(11,716	)
Impairment charge		—			(43	)		—			—			—			(43	)

Operating (loss) income		(57	)		357			720			322			57			1,399
Interest expense		(23	)		(201	)		(1	)		(5	)		26			(204	)
Interest and other income (expense), net		—			14			(15	)		4			(3	)		—
Debt retirement charge		—			(35	)		—			—			—			(35	)

(Loss) income from continuing operations before income taxes		(80	)		135			704			321			80			1,160
Benefit (provision) for income taxes		20			(34	)		(180	)		(82	)		(20	)		(296	)
Equity in net income of consolidated subsidiaries		1,016			751			—			—			(1,767	)		—

Income from continuing operations		956			852			524			239			(1,707	)		864
Income from discontinued operations, net of income tax		—			104			—			—			—			104

Net income		956			956			524			239			(1,707	)		968
Net income attributable to noncontrolling interests		—			—			—			—			(12	)		(12	)

Net income attributable to L-3	$	956		$	956		$	524		$	239		$	(1,719	)	$	956

Comprehensive income attributable to L-3	$	758		$	758		$	514		$	218		$	(1,490	)	$	758

Condensed Combining Statements of Cash Flows


	L-3 Holdings (Parent)			L-3 Communications			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated L-3
	(in millions)
Condensed Combining Statements of Cash Flows: For the year ended December 31, 2013:
Operating activities:
Net cash from operating activities	$	999		$	437		$	776		$	231		$	(1,180	)	$	1,263

Investing activities:
Business acquisitions, net of cash acquired		—			(62	)		—			—			—			(62	)
Investments in L-3 Communications		(149	)		—			—			—			149			—
Other investing activities		—			(88	)		(89	)		(22	)		—			(199	)

Net cash used in investing activities		(149	)		(150	)		(89	)		(22	)		149			(261	)

Financing activities:
Common stock repurchased		(800	)		—			—			—			—			(800	)
Dividends paid on L-3 Holdings common stock		(199	)		—			—			—			—			(199	)
Dividends paid to L-3 Holdings		—			(999	)		—			—			999			—
Investments from L-3 Holdings		—			149			—			—			(149	)		—
Other financing activities		149			575			(687	)		(188	)		301			150

Net cash used in financing activities		(850	)		(275	)		(687	)		(188	)		1,151			(849	)

Effect of foreign currency exchange rate changes on cash		—			—			—			(2	)		—			(2	)

Net (decrease) increase in cash		—			12			—			19			120			151
Cash and cash equivalents, beginning of the year		—			246			—			242			(139	)		349

Cash and cash equivalents, end of the year	$	—		$	258		$	—		$	261		$	(19	)	$	500

For the year ended December 31, 2012:
Operating activities:
Net cash from operating activities from continuing operations	$	1,067		$	252		$	858		$	265		$	(1,211	)	$	1,231

Investing activities:
Business acquisitions, net of cash acquired		—			(348	)		—			—			—			(348	)
Investments in L-3 Communications		(42	)		—			—			—			42			—
Other investing activities		—			225			(59	)		(18	)		—			148

Net cash used in investing activities from continuing operations		(42	)		(123	)		(59	)		(18	)		42			(200	)

Financing activities:
Redemption of senior subordinated notes		—			(500	)		—			—			—			(500	)
Common stock repurchased		(872	)		—			—			—			—			(872	)
Dividends paid on L-3 Holdings common stock		(195	)		—			—			—			—			(195	)
Dividends paid to L-3 Holdings		—			(1,067	)		—			—			1,067			—
Investments from L-3 Holdings		—			42			—			—			(42	)		—
Other financing activities		42			924			(799	)		(234	)		107			40

Net cash used in financing activities from continuing operations		(1,025	)		(601	)		(799	)		(234	)		1,132			(1,527	)

Effect of foreign currency exchange rate changes on cash		—			—			—			7			—			7
Net increase in cash and cash equivalents of discontinued operations		—			74			—			—			—			74

Net (decrease) increase in cash		—			(398	)		—			20			(37	)		(415	)
Cash and cash equivalents, beginning of the year		—			644			—			222			(102	)		764

Cash and cash equivalents, end of the year	$	—		$	246		$	—		$	242		$	(139	)	$	349


	L-3 Holdings (Parent)			L-3 Communications			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated L-3
	(in millions)
For the year ended December 31, 2011:
Operating activities:
Net cash from operating activities from continuing operations	$	1,157		$	476		$	792		$	220		$	(1,414	)	$	1,231

Investing activities:
Business acquisitions, net of cash acquired		—			(20	)		—			—			—			(20	)
Investments in L-3 Communications		(55	)		—			—			—			55			—
Other investing activities		—			(84	)		(75	)		(20	)		—			(179	)

Net cash used in investing activities from continuing operations		(55	)		(104	)		(75	)		(20	)		55			(199	)

Financing activities:
Proceeds from sale of senior notes		—			1,143			—			—			—			1,143
Redemption of senior subordinated notes and CODES		(11	)		(1,150	)		—			—			—			(1,161	)
Common stock repurchased		(958	)		—			—			—			—			(958	)
Dividends paid on L-3 Holdings common stock		(188	)		—			—			—			—			(188	)
Dividends paid to L-3 Holdings		—			(1,157	)		—			—			1,157			—
Investments from L-3 Holdings		—			55			—			—			(55	)		—
Other financing activities		55			882			(717	)		(447	)		272			45

Net cash used in financing activities from continuing operations		(1,102	)		(227	)		(717	)		(447	)		1,374			(1,119	)

Effect of foreign currency exchange rate changes on cash		—			—			—			(4	)		—			(4	)
Net increase in cash and cash equivalents of discontinued operations		—			248			—			—			—			248

Net (decrease) increase in cash		—			393			—			(251	)		15			157
Cash and cash equivalents, beginning of the year		—			251			—			473			(117	)		607

Cash and cash equivalents, end of the year	$	—		$	644		$	—		$	222		$	(102	)	$	764